Amazon Goes All In On Grocery With Whole Foods Acquisition

June 16, 2017 |
Merrick Rosner

Quick, hit the panic button, the Online Giant Amazon, your biggest competitor whether you acknowledged that yet or not, just took a formidable seat at the brick and mortar table.

Now, take a deep breath, exhale, it’s going to be OK, they’ve just confirmed that brick and mortar is here to stay.

Consolidation of the marketplace was inevitable and we’re seeing it all around us and all throughout the supply chain, with CPGs, wholesalers, technology providers, and of course retailers.

The game has changed, officially, and there’s no turning back.

So what does this mean for you, the independent retailer? How should you react and respond to this shock wave that was just sent through your system?

We’ve got some thoughts on this.

1. We repeat, there’s good news here, brick and mortar has been validated for the grocery industry, and it’s here to stay.

Amazon has been toying around with brick and mortar concepts for a couple of years now from book stores to grocery concepts and they’ve acknowledged that it plays a vital role in the ideal customer experience, especially when it comes to groceries … where aside from the boxes and cans it’s a very hands on and personal experience. Now they’ve got a huge playground to play in and make it even better and highly experiential and technology driven.

2. You better get to know your customer quickly and fight like heck to keep them, because there’s somebody out there who just paid $13.7B to get a bigger piece of them then they likely already have.

Amazon is The King of Personalization. Recommendations, reviews, personalized offers, shopping lists, and ease of use. They know what I want, when I want it, and how I want to both purchase and receive it.

We’ve asked these 3 questions before and we’ll keep asking them until you give us the right answers:

Are you capturing product level detail on your customers?

Do you have access to them via mobile and/or email?

Are you personalizing their experience both in-store and out?

As long as independent grocers continue to answer no to any of these three questions, their businesses will remain in a very vulnerable and unstable state.

Correct me if I’m wrong but you’ve gone through the box checking process over the last 5-10 years right?

Website: ✓

Facebook, Instagram, Twitter: ✓, ✓, ✓

Digital coupons: ✓, ✓- (we’ll give these next few a check minus)

E-commerce: ✓, ✓-

Mobile app: ✓, ✓-

Personalization: wait, what’s that? I didn’t have that box on my list …

There’s a lot to discuss on this topic, but for now I’ll keep it very blunt and straightforward:Stop checking boxes for the sake of checking boxes. It’s time to get strategic before you continue down the tactical path. There’s an order of operations to this thing called personalization, and it’s OK to ask for help. You need data, and lots of it, and you need to make it actionable.

I can guarantee that you or someone you know is an Amazon Prime member … so what exactly does that mean? It means that we paid money to join the club, Amazon’s club, to be part of their experience. Amazon has done an amazing job training us to do exactly what they want us to do and how they want us to shop: from joining Prime, to one-click purchases (now one-swipe purchases), to talking to a piece of plastic to order things by voice with Alexa and Echo, or pressing a piece of plastic that we stuck to our washer machines with the Dash Button. That’s just the beginning. They are going to train us on how they’d like us to behave before, during, and after we visit a retail store now as well.

What are you doing or offering to entice a certain behavior from your customers? What unique value proposition do you offer to keep them coming back and wanting and buying more? You don’t have to think about it like training them … but rather just treat them the way they want and now expect to be treated and they’ll reward you for it.

This will continue to evolve over time but on the surface there are two very obvious things:

Nobody in the world is better at supply chain than Amazon. That was Whole Foods weakest link and now that link just turned to gold.

Experientially they’ll just continue to improve. The shopping experience both online and offline will continue to be enhanced and further personalized, and there’re no doubt that their shoppers will be happy ones. That buzzword of the past few years, Omnichannel, now has a face and a home.

Now you want to hear something a little scary? Amazon basically got Whole Foods for free! What? Yup, based on the increase in stock price since the announcement, their market cap has gone up over $15B. Not only did they get them for free, but they’ve made a little pocket change in the process to spruce up the place a bit!

This is an enormous announcement, one you only see a time or two per decade, but it shouldn’t really come as a surprise. Amazon arguably had one of the best grocery shopping experiences already, they just decided to put four walls around it over night. While most of the news the past few months has been around retail doors closing, the largest online retailer in the world just wedged $13.7B into Whole Foods’ doors to ensure they didn’t meet the same fate.

You’ve still got one thing they don’t, your loyal local home town customers. But what are you going to do to keep them? Customer retention is hard work, but it’s a necessity. Make it your top priority. It’s time to step up and act like, well, Amazon. Know your customer. Cater to your customer. Make the experience their own. Upgrade your technology. Upgrade your experience. Personalize it.

About Merrick Rosner

I'm currently the Vice President of Enterprise Accounts for AppCard. I have experience as an executive, operator, advisor and entrepreneur. The majority of my career has been spent building and growing great brands and organizations with over a decade of retail and retail technology experience. I graduated early from Lehigh University with a double major in Finance and Marketing and a minor in African-American studies. My wife and I live in Connecticut with our two beautiful daughters and our puppy Scotch!